PARTHASARATHY V Vs. ADDITIONAL COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question that arises for consideration in this writ petition under Article 226 of the Constitution of India is whether the income received by a person appointed as a judge of the High Court, in respect of the fees due to him while carrying on the profession of an advocate is chargeable to tax under Sub-section (4) of Section 176 of the Income-tax Act, 1961 (Act No. 43 of 1961). Sri Valluri Parthasarathy, the petitioner herein, was practising as an advocate of the High Court of Andhra Pradesh till April 4, 1968, when he was appointed a judge of the High Court of Andhra Pradesh. On such appointment on account of the constitutional disability he ceased to practice. He retired as a judge of the High Court of Andhra Pradesh on March, 6, 1972, and in June, 1972, he informed the Bar Council of Andhra Pradesh that, he is resuming practice subject to the provisions of Article 220 of the Constitution. During the assessment year 1969-70, he received a sum of Rs. 11,000 and during 1970-71 a sum of Rs. 3,000 by way of fees for the professional services rendered by him during the period prior to his appointment as a judge of the High Court. THE Income-tax Officer assessed these amounts to tax. No appeal was filed before the Assistant Commissioner of Income-tax. THE ' petitioner, however, filed a revision petition before the Commissioner of Income-tax under Section 264 of the Act. THE Commissioner of Income-tax did not accept the contention of the petitioner that the fees for the professional services rendered by him earlier as an advocate but received while he was a judge of the High Court, when he was not carrying on the profession of an advocate, was not chargeable to tax, and dismissed the revision petition by his order dated October 31, 1972.

(2.) IN this petition, it is contended that on the facts and circumstances of the case Section 176(4) is not attracted. Mr. Dasaratharama Reddy, the learned counsel for the petitioner, contends that the petitioner cannot be said to have discontinued his profession of an advocate; he merely suspended his profession on account of the constitutional disability incurred by him during the period when he was a judge of the High Court. IN case of mere suspension of profession, Sub-section (4) of Section 176 is not applicable. He also contends that even if it is deemed to be discontinuance of the profession, Sub-section (4) of Section 176 is not attracted. That provision, according to him, is only attracted where discontinuance of the profession is due to retirement or death, of the person concerned and not discontinuance for other reason. He further argues that even if cessation of profession includes suspension of practice for a short period, it could only cover cases of voluntary cessation and not involuntary cessation of profession due to constitutional provisions. Oa the other hand, it is contended for the revenue that even temporary suspension of business or profession for whatever reason, is covered by Sub-section (4) of Section 176. At the outset it would be useful to notice the law as laid down by the Supreme Court in Nalinikant Ambalal Mody v. S. A. L. Narayan Row, Commissioner of INcome-tax, . That was the case of an assessee who was an advocate, who had adopted the calendar year as the accounting year and had kept his accounts on cash basis. That advocate ceased to carry on his profession from 1st March, 1957, when he was elevated to the Bench of the High Court. IN the years 1958 and 1959, during no part of which he carried on any profession, he received certain monies on account of fees outstanding lor professional work done by him. This income was assessed to tax. The court held that these receipts were not chargeable to tax at all. IN coming to that conclusion the court observed :

(3.) UNDER Sub-section (4) of Section 176 provision is made to include any sum received by a person after he has discontinued the profession as income of the recipient and charged to tax accordingly in the year of receipt on certain conditions. Primarily such sum was to be included in the total income of that person and was exigible to tax, if it was liable to be included, had it been received before such discontinuance. Further, for becoming exigible to tax the discontinuance of the profession should have been on account of :